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Electing S Corporation Status

The procedures below apply to S corporations authorized to conduct business prior to December 22, 2022. See P.L. 2022, c. 133, ³Ô¹ÏºÚÁÏ S Corporation Procedural Changes and TB-105 for information on the new procedures.

You must apply for S corporation status in ³Ô¹ÏºÚÁÏ and receive approval of the election to receive S corporation tax treatment. S corporation status for federal purposes does not automatically flow through for ³Ô¹ÏºÚÁÏ purposes. If a federal S corporation fails to elect ³Ô¹ÏºÚÁÏ S status, it will be required to file and pay tax as a C corporation on any income allocated to this State.

Every corporation shareholder must consent to the ³Ô¹ÏºÚÁÏ election as part of the qualifications.

Once the ³Ô¹ÏºÚÁÏ election is made and accepted, it remains a ³Ô¹ÏºÚÁÏ S corporation as long as it is a federal S corporation.

The steps to apply for S Corp status in ³Ô¹ÏºÚÁÏ are as follows:

• Apply for S corporation status with the ;
• Be fully registered with the ³Ô¹ÏºÚÁÏ Division of Revenue and Enterprise Services, and have a Certificate of Incorporation or a Certificate of Authority to do business in this State;
• File a ³Ô¹ÏºÚÁÏ S Corporation Election .

Filing Due Date

For the election to be in effect for the current tax year, the ³Ô¹ÏºÚÁÏ S Corporation Election must be filed within 3 ½ months from the beginning of the fiscal year. For example, filing of the election for a fiscal period beginning July 1 must be done by October 15. The corporation will be notified within 30 days after filing whether or not the election is accepted.

Changes to Shareholders After the Election

When a ³Ô¹ÏºÚÁÏ S corporation alters or expands its ownership, an Amendment to Shareholders must be submitted using the online SCORP application. In addition, new shareholders also are responsible for reporting taxable gains and losses. However, some new shareholders may not consent to file a ³Ô¹ÏºÚÁÏ Income Tax return. S corporations are responsible for paying ³Ô¹ÏºÚÁÏ Income Taxes owed by the non-consenting shareholders.

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How to Revoke an Election

A letter of revocation and a copy of the original election form must be submitted using the online SCORP application to revoke an election. The letter must be signed by all shareholders holding more than 50% of the outstanding shares of stock on the day of the revocation. The Revocation of Election filing deadline is on or before the last day of the first tax year of the election.

More information on applying for S-Corp Election, QSSS Election, Retro S Election, Amendment to Shareholders, or Revocation of Election.